The Pension Protection Fund (PPF) will adopt a new framework which will see it fix levy rules for three years and average funding levels so that short-term volatility in the financial markets is not reflected in the measure of underfunding risk.
In addition, investment risk will be reflected in the levy calculation for the first time and a system of ten insolvency bands will be introduced instead of the proposed six to prevent ‘cliff edges’ where schemes could face large levy rises.
The framework will apply from 2012/13.
Alan Rubenstein, chief executive of the PPF, said: “This marks a significant milestone on our journey to construct a levy which is fit for purpose in the long-term.
“We have worked closely with all our stakeholders in industry and elsewhere and we are grateful to everyone for their contributions. In particular, I would thank members of the industry steering group, set up to help us develop this framework, for their invaluable guidance throughout.
“We are now embarking on the second leg of our journey, making sure the new framework is implemented successfully.”
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